US government interest costs rise 12% to $1.27 trillion in first 11 months of FY2026

The US government spent $1.27 trillion on interest payments in the first 11 months of fiscal year 2026. That’s $139 billion more than the same period last year, a roughly 13% jump that sets a new record for the cost of carrying America’s debt.

The federal government is now spending more on interest than it does on the entire Department of Defense. The tab for simply servicing existing obligations has become the second-largest category of federal spending, trailing only Social Security.

The numbers behind the surge

Total US public debt now sits in the range of $39 to $40 trillion. The interest bill on that mountain of IOUs has been climbing steadily, but the pace has accelerated as older Treasury securities issued during the era of near-zero interest rates mature and get replaced with new ones carrying much higher yields.

Previous fiscal years saw interest cost growth in the 7% to 9% range. The 13% increase through the first 11 months of FY2026 represents a meaningful acceleration. In August 2026 alone, gross interest hit $97.7 billion, though that figure actually dipped slightly from the prior month due to shifts in inflation accruals on Treasury Inflation-Protected Securities.

For the full fiscal year 2025, net interest totaled roughly $970 billion. The jump to $1.27 trillion through just 11 months of FY2026 underscores how fast the problem is compounding. National defense spending, by comparison, came in at approximately $876 billion year-to-date, comfortably below the interest line.

How we got here

The roots of this fiscal crunch trace back to the pandemic era. Between 2020 and 2021, the federal government borrowed trillions to fund emergency relief programs, stimulus checks, and economic stabilization measures. At the time, interest rates were effectively zero, making the cost of that borrowing almost trivially cheap.

That calculus changed dramatically when the Federal Reserve began raising rates in 2022 to combat inflation. Suddenly, the government was rolling over its massive debt stock at rates three, four, sometimes five times higher than before.

The current debt service burden is unprecedented in the post-World War II era. Even during the high-rate environment of the early 1980s, the absolute dollar amounts were a fraction of today’s figures, and the debt-to-GDP ratio was far more manageable.

The long-term outlook is not reassuring

The Congressional Budget Office projects that net interest outlays will total $16.2 trillion over the next decade. That’s a steady climb from approximately $1 trillion in FY2026 to a projected $2.1 trillion annually by 2036 under current fiscal policy assumptions.

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